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Date : Jun 04, 2021
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the May 2021 round of the Inflation Expectations Survey of Households (IESH)1. In view of the Covid-19 pandemic, the survey was conducted through telephonic interviews during April 29 to May 11, 2021 in 18 major cities. The results2 are based on responses from 5,979 urban households3.

Highlights:

  1. Households’ median inflation perception for current period rose by 150 basis points from the previous round of the survey [Charts 1a and 1b; Table 3].

  2. Median inflation expectation for both three months and one year ahead period increased by 70 basis points each in the latest survey round [Charts 1a and 1b; Table 3].

  3. About 60 per cent of the respondents expect higher general inflation over the next three months as well as over the next one year [Tables 1a and 1b].

  4. Expectations on general prices and inflation were mostly aligned with those for the food group [Table 4].

  5. Households expect higher rise in prices over one year horizon when compared to one quarter horizon for non-food products, household durables, housing and services [Tables 1a and 1b].

Chart 1

Note: Please see the excel file for time series data.

Table 1(a): Product-wise Expectations of Prices for Three Months ahead
(Percentage of Respondents)
Survey period ended May-20 Nov-20 Jan-21 Mar-21 May-21
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 85.3 0.73 83.3 0.85 83.7 0.89 86.6 0.74 83.7 0.68
Price increase more than current rate 56.0 1.02 55.4 1.14 56.0 1.26 58.4 1.14 58.5 0.91
Price increase similar to current rate 23.5 0.89 23.6 0.95 22.4 0.95 24.1 0.94 21.2 0.76
Price increase less than current rate 5.8 0.49 4.4 0.46 5.3 0.53 4.1 0.50 4.0 0.37
No changes in prices 12.4 0.69 14.2 0.81 14.3 0.86 11.1 0.71 14.0 0.63
Decline in prices 2.3 0.32 2.4 0.32 1.9 0.30 2.3 0.29 2.3 0.30
Food Product                    
Prices will increase 84.6 0.75 81.5 0.83 80.9 0.95 85.2 0.70 84.4 0.72
Price increase more than current rate 58.6 1.00 54.7 1.10 54.2 1.16 61.2 1.01 60.2 0.92
Price increase similar to current rate 20.0 0.82 20.3 0.90 20.0 0.95 18.1 0.81 19.4 0.75
Price increase less than current rate 6.0 0.49 6.5 0.59 6.7 0.57 6.0 0.55 4.8 0.38
No changes in prices 10.7 0.64 11.6 0.67 13.0 0.82 9.3 0.60 11.8 0.63
Decline in prices 4.7 0.45 6.9 0.54 6.1 0.54 5.5 0.45 3.9 0.39
Non- Food Product                    
Prices will increase 76.7 0.88 74.8 0.99 79.3 0.98 81.0 0.78 78.6 0.79
Price increase more than current rate 49.5 0.99 48.0 1.11 51.6 1.20 57.0 1.00 53.1 0.95
Price increase similar to current rate 20.8 0.82 20.3 0.87 20.9 0.90 19.4 0.77 19.8 0.75
Price increase less than current rate 6.4 0.50 6.4 0.57 6.7 0.56 4.7 0.43 5.6 0.44
No changes in prices 17.8 0.79 20.1 0.92 16.9 0.91 12.9 0.69 17.1 0.72
Decline in prices 5.5 0.49 5.2 0.48 3.8 0.40 6.2 0.48 4.3 0.42
Household Durables                    
Prices will increase 55.1 1.04 60.3 1.09 64.3 1.11 68.1 0.92 58.8 0.96
Price increase more than current rate 33.6 0.96 38.2 1.11 42.5 1.15 46.0 0.98 37.7 0.94
Price increase similar to current rate 16.4 0.76 16.2 0.82 16.8 0.77 17.7 0.74 16.4 0.70
Price increase less than current rate 5.1 0.44 5.8 0.59 5.0 0.49 4.4 0.44 4.7 0.40
No changes in prices 29.7 0.94 27.4 1.00 27.2 1.05 24.6 0.84 32.2 0.90
Decline in prices 15.2 0.76 12.3 0.71 8.4 0.58 7.3 0.50 9.0 0.56
Cost of Housing                    
Prices will increase 48.6 1.01 60.7 1.12 66.1 1.11 68.9 0.93 54.9 0.94
Price increase more than current rate 30.2 0.93 40.4 1.14 45.1 1.20 48.4 1.03 36.5 0.92
Price increase similar to current rate 13.6 0.69 15.9 0.80 16.2 0.79 16.7 0.75 14.4 0.67
Price increase less than current rate 4.8 0.45 4.4 0.50 4.8 0.49 3.8 0.40 3.9 0.36
No changes in prices 30.3 0.93 25.9 1.01 24.6 1.02 22.2 0.86 30.5 0.89
Decline in prices 21.1 0.83 13.4 0.84 9.3 0.66 8.9 0.54 14.6 0.69
Cost of Services                    
Prices will increase 68.3 0.97 70.4 1.02 68.8 1.06 75.6 0.90 67.6 0.89
Price increase more than current rate 43.2 0.99 44.8 1.10 45.7 1.15 51.6 1.02 44.6 0.94
Price increase similar to current rate 19.3 0.79 20.3 0.88 18.5 0.81 19.4 0.79 18.0 0.71
Price increase less than current rate 5.9 0.46 5.3 0.50 4.6 0.50 4.5 0.44 5.0 0.40
No changes in prices 27.4 0.93 25.2 0.98 27.4 1.02 20.8 0.84 29.2 0.87
Decline in prices 4.4 0.42 4.4 0.44 3.8 0.47 3.6 0.36 3.2 0.35
Note:
1. The table provides estimates and standard errors for qualitative responses.
2. Constituent items may not add up to the corresponding total, due to rounding off.

Table 1(b): Product-wise Expectations of Prices for One Year ahead
(Percentage of Respondents)
Survey period ended May-20 Nov-20 Jan-21 Mar-21 May-21
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 85.6 0.73 86.5 0.77 88.0 0.80 88.7 0.61 86.9 0.65
Price increase more than current rate 57.1 1.00 59.5 1.09 62.9 1.23 63.4 1.07 62.4 0.91
Price increase similar to current rate 23.8 0.88 22.9 0.92 21.2 0.95 21.4 0.87 20.3 0.75
Price increase less than current rate 4.7 0.43 4.1 0.44 3.9 0.43 3.8 0.44 4.2 0.38
No changes in prices 11.9 0.67 10.3 0.69 9.6 0.75 8.5 0.54 10.4 0.58
Decline in prices 2.5 0.33 3.2 0.39 2.4 0.33 2.8 0.32 2.7 0.33
Food Product                    
Prices will increase 77.3 0.86 77.7 0.97 80.5 0.96 81.7 0.74 81.7 0.76
Price increase more than current rate 46.9 1.01 48.4 1.10 53.0 1.21 54.6 1.01 53.5 0.95
Price increase similar to current rate 24.2 0.88 24.0 0.93 22.6 0.96 22.2 0.83 22.6 0.77
Price increase less than current rate 6.3 0.51 5.4 0.48 4.9 0.49 4.9 0.46 5.6 0.43
No changes in prices 15.7 0.74 14.3 0.82 13.4 0.84 12.0 0.61 12.5 0.64
Decline in prices 6.9 0.52 8.0 0.58 6.1 0.55 6.3 0.45 5.8 0.46
Non- Food Product                    
Prices will increase 73.3 0.92 75.0 0.98 80.4 0.93 79.9 0.79 79.2 0.78
Price increase more than current rate 42.6 0.99 45.6 1.13 52.8 1.22 54.0 1.02 51.8 0.96
Price increase similar to current rate 23.9 0.87 23.5 0.93 22.7 0.93 21.4 0.83 21.8 0.76
Price increase less than current rate 6.8 0.51 5.9 0.55 4.9 0.45 4.6 0.44 5.7 0.44
No changes in prices 20.7 0.84 19.3 0.89 15.0 0.84 13.4 0.66 15.8 0.70
Decline in prices 6.0 0.49 5.8 0.51 4.6 0.46 6.6 0.47 5.0 0.44
Household Durables                    
Prices will increase 59.6 1.03 65.0 1.08 69.8 1.07 70.3 0.90 64.7 0.94
Price increase more than current rate 34.8 0.99 39.9 1.08 45.0 1.20 47.2 0.98 41.2 0.94
Price increase similar to current rate 19.1 0.79 19.7 0.88 19.9 0.81 18.8 0.74 18.6 0.72
Price increase less than current rate 5.7 0.47 5.4 0.54 4.9 0.48 4.4 0.42 4.9 0.39
No changes in prices 28.4 0.93 24.6 1.01 22.1 0.97 22.7 0.81 26.7 0.86
Decline in prices 12.1 0.67 10.3 0.68 8.1 0.63 6.9 0.48 8.6 0.55
Cost of Housing                    
Prices will increase 59.7 1.00 72.1 1.01 74.8 1.05 75.7 0.86 65.4 0.93
Price increase more than current rate 36.9 0.98 47.8 1.10 49.9 1.22 53.8 1.04 43.5 0.97
Price increase similar to current rate 17.3 0.77 19.8 0.87 20.2 0.91 18.3 0.79 17.5 0.71
Price increase less than current rate 5.5 0.46 4.5 0.44 4.7 0.48 3.6 0.38 4.5 0.40
No changes in prices 25.1 0.89 19.2 0.86 17.7 0.95 17.8 0.76 23.3 0.83
Decline in prices 15.2 0.73 8.7 0.65 7.5 0.61 6.5 0.48 11.2 0.62
Cost of Services                    
Prices will increase 74.4 0.91 77.2 0.98 78.5 0.98 81.4 0.75 76.5 0.82
Price increase more than current rate 44.6 0.98 49.0 1.11 51.1 1.21 55.2 1.02 50.0 0.94
Price increase similar to current rate 23.1 0.85 22.2 0.87 22.9 0.96 21.5 0.82 21.3 0.75
Price increase less than current rate 6.7 0.50 6.1 0.55 4.6 0.45 4.7 0.44 5.2 0.43
No changes in prices 22.1 0.87 18.6 0.91 18.2 0.94 15.2 0.67 20.1 0.77
Decline in prices 3.5 0.38 4.2 0.45 3.3 0.41 3.4 0.35 3.4 0.36
Note:
1. The table provides estimates and standard errors for qualitative responses.
2. Constituent items may not add up to the corresponding total, due to rounding off.

Table 2: Inflation Expectations of Various Groups: May 2021
  Current Perception Three Months ahead Expectation One Year ahead Expectation
Mean Median Mean Median Mean Median
Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Overall 10.4 0.09 10.2 0.04 11.4 0.09 10.8 0.07 10.7 0.11 10.9 0.12
Gender-wise                        
Male 10.6 0.10 10.3 0.05 11.5 0.10 11.0 0.19 10.8 0.12 11.0 0.28
Female 9.8 0.13 9.5 0.38 11.0 0.13 10.5 0.09 10.6 0.15 10.7 0.12
Category-wise                        
Financial Sector Employees 9.5 0.44 8.7 0.92 10.8 0.44 10.7 0.97 10.1 0.53 10.4 1.34
Other Employees 10.3 0.14 10.2 0.07 11.3 0.14 10.8 0.15 10.7 0.17 10.8 0.18
Self Employed 10.7 0.15 10.3 0.07 11.7 0.14 11.3 0.50 10.8 0.18 11.3 0.50
Homemakers 9.8 0.14 9.6 0.38 11.0 0.14 10.5 0.09 10.6 0.18 10.7 0.14
Retired Persons 10.9 0.32 10.5 0.14 11.7 0.34 12.2 0.94 11.2 0.42 12.6 1.49
Daily Workers 10.5 0.21 10.3 0.09 11.6 0.22 11.3 0.63 10.9 0.28 11.4 0.76
Other category 10.1 0.22 10.0 0.33 10.8 0.22 10.4 0.15 10.2 0.29 10.5 0.21
Age Group-wise                        
Up to 25 years 9.4 0.17 8.6 0.24 10.5 0.18 10.1 0.19 10.3 0.21 10.5 0.12
25 to 30 years 10.2 0.16 10.2 0.12 11.2 0.16 10.7 0.13 10.6 0.21 10.8 0.24
30 to 35 years 10.5 0.17 10.3 0.08 11.5 0.16 11.0 0.31 10.7 0.20 10.9 0.29
35 to 40 years 10.4 0.17 10.2 0.09 11.4 0.17 10.9 0.28 10.9 0.21 11.3 0.57
40 to 45 years 10.6 0.17 10.3 0.08 11.7 0.16 11.1 0.41 10.9 0.21 11.2 0.51
45 to 50 years 10.6 0.22 10.4 0.10 11.6 0.21 11.8 0.60 10.7 0.25 11.2 0.58
50 to 55 years 10.8 0.27 10.4 0.13 11.6 0.27 11.2 0.68 10.5 0.34 10.7 0.40
55 to 60 years 10.7 0.28 10.4 0.11 11.4 0.27 10.7 0.22 10.3 0.34 10.7 0.37
60 years and above 10.9 0.27 10.4 0.14 11.7 0.27 11.6 0.77 11.2 0.32 12.4 1.05
City-wise                        
Ahmedabad 10.1 0.34 10.1 0.41 11.3 0.31 11.2 0.78 11.1 0.35 11.4 0.89
Bengaluru 10.5 0.26 10.4 0.10 11.9 0.25 12.4 0.64 12.0 0.31 15.2 0.33
Bhopal 9.5 0.70 8.9 1.12 10.9 0.74 10.5 1.01 9.5 0.90 10.2 1.14
Bhubaneswar 10.0 0.74 10.1 1.00 11.2 0.75 12.5 2.26 10.3 0.82 11.1 2.04
Chennai 9.3 0.33 9.6 0.72 10.3 0.34 10.2 0.44 10.4 0.42 10.8 0.72
Delhi 10.5 0.23 10.3 0.11 11.5 0.23 11.1 0.52 10.6 0.27 10.7 0.30
Guwahati 11.6 0.63 10.8 0.80 12.4 0.66 12.7 1.23 12.4 0.77 13.9 1.69
Hyderabad 10.9 0.26 10.5 0.16 11.9 0.25 12.0 0.90 11.4 0.34 13.0 1.17
Jaipur 11.3 0.50 10.8 0.90 11.6 0.50 11.2 1.30 11.2 0.62 11.5 1.52
Kolkata 11.1 0.28 10.6 0.16 12.1 0.27 13.0 0.98 11.5 0.31 12.3 0.85
Lucknow 10.1 0.44 9.1 0.41 10.7 0.41 9.9 0.40 10.7 0.50 10.7 0.44
Mumbai 10.8 0.21 10.3 0.12 11.6 0.21 11.1 0.48 10.0 0.29 10.7 0.30
Nagpur 7.5 0.44 6.7 0.42 8.7 0.42 8.2 0.49 8.2 0.58 8.4 0.47
Patna 9.5 0.86 8.9 0.90 10.1 0.88 9.8 0.88 8.8 1.06 8.8 1.13
Thiruvananthapuram 6.1 0.80 4.8 0.64 7.6 0.79 6.3 0.55 8.7 0.99 8.1 1.30
Chandigarh 10.8 0.47 10.7 0.48 11.0 0.49 11.1 0.72 10.1 0.79 10.7 0.78
Ranchi 8.1 0.51 7.5 0.52 8.4 0.47 7.9 0.56 6.9 0.67 7.1 0.71
Raipur 9.4 0.69 8.9 0.68 10.3 0.71 9.7 0.71 9.8 0.81 9.6 0.74
Note: The table provides estimates and standard errors for quantitative responses.

Table 3: Household Inflation Expectations – Current Perception, Three Months and One Year Ahead Expectations
  Current Perception Three Months ahead Expectation One Year ahead Expectation
Mean Median Mean Median Mean Median
Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
May-20 9.6 0.09 9.3 0.28 10.6 0.09 10.4 0.06 9.7 0.12 10.2 0.07
Nov-20 9.5 0.11 8.8 0.18 10.4 0.11 10.1 0.09 9.8 0.13 10.1 0.11
Jan-21 9.1 0.12 8.2 0.17 10.0 0.12 9.3 0.29 9.7 0.13 10.1 0.15
Mar-21 9.4 0.11 8.7 0.16 10.4 0.11 10.1 0.11 10.0 0.12 10.2 0.09
May-21 10.4 0.09 10.2 0.04 11.4 0.09 10.8 0.07 10.7 0.11 10.9 0.12
Note: The table provides estimates and standard errors for quantitative responses.

Table 4: Households Expecting General Price Movements in Coherence with Movements in Price Expectations of Various Product Groups: Three Months Ahead and One Year Ahead
(Percentage of Respondents)
Survey period ended Food Non-Food Households durables Housing Cost of services
Three Months Ahead
May-20 63.3 59.8 46.5 42.6 57.3
Nov-20 62.7 63.5 52.4 54.0 60.7
Jan-21 63.3 64.3 54.5 55.7 62.8
Mar-21 67.0 65.7 57.4 58.6 65.1
May-21 68.0 65.1 51.8 50.3 60.5
One Year Ahead
May-20 62.3 59.5 50.9 50.3 62.3
Nov-20 66.4 65.9 56.7 62.1 68.9
Jan-21 68.4 68.6 60.6 63.0 69.0
Mar-21 69.6 70.1 62.4 65.5 71.6
May-21 68.3 67.1 57.7 57.1 67.2
Note: Figures are based on sample observations

Table 5(a): Cross-tabulation of Number of Respondents by Current Inflation Perception and Three Months Ahead Inflation Expectations: May 2021
Three Months Ahead Inflation Rate (per cent)
Current Inflation Rate (per cent)   <1 1-<2 2-<3 3-<4 4-<5 5-<6 6-<7 7-<8 8-<9 9-<10 10-<11 11-<12 12-<13 13-<14 14-<15 15-<16 >=16 No idea Total
<1 6 4 2 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 13
1-<2 3 14 6 5 1 1 0 0 0 0 1 0 0 0 0 0 0 0 31
2-<3 2 5 80 40 24 12 4 0 3 0 1 0 0 0 0 0 1 1 173
3-<4 0 2 7 75 39 39 23 2 2 0 0 0 0 0 0 1 0 0 190
4-<5 0 0 2 1 82 50 42 10 7 1 5 0 0 0 0 0 0 0 200
5-<6 0 3 7 9 17 359 118 135 74 8 94 0 2 0 0 10 7 1 844
6-<7 0 1 1 2 6 8 118 70 64 11 22 2 7 0 0 1 0 1 314
7-<8 1 0 1 1 5 11 5 147 101 51 45 4 12 2 1 7 1 1 396
8-<9 0 0 0 2 0 1 3 6 197 70 118 16 23 8 5 4 11 0 464
9-<10 0 0 0 0 1 0 1 0 2 85 36 20 22 2 1 5 3 0 178
10-<11 0 0 0 1 1 22 6 2 21 8 497 52 174 45 18 256 144 2 1249
11-<12 0 0 0 0 0 0 0 1 0 0 0 13 10 2 1 8 1 1 37
12-<13 0 0 0 0 1 0 0 0 1 0 2 0 39 7 14 21 8 0 93
13-<14 0 0 0 0 0 0 0 0 2 0 0 0 0 17 3 1 6 0 29
14-<15 0 0 0 0 0 0 0 0 0 0 1 1 1 0 9 6 7 0 25
15-<16 0 0 0 0 0 3 0 1 0 0 8 1 3 4 0 120 191 0 331
>=16 1 0 0 0 3 12 0 1 1 0 16 0 0 0 1 35 1333 9 1412
Total 13 29 106 136 180 518 320 375 475 234 847 109 293 87 53 475 1713 16 5979
Note: Figures are based on sample observations

Table 5(b): Cross-tabulation of Number of Respondents by Current Inflation Perception and One Year Ahead Inflation Expectations: May 2021
One Year Ahead Inflation Rate (per cent)
Current Inflation Rate (per cent)   <1 1-<2 2-<3 3-<4 4-<5 5-<6 6-<7 7-<8 8-<9 9-<10 10-<11 11-<12 12-<13 13-<14 14-<15 15-<16 >=16 No idea Total
<1 3 2 4 2 0 0 0 0 0 0 1 0 0 0 0 0 1 0 13
1-<2 5 7 7 4 3 3 0 0 1 0 0 0 0 0 0 1 0 0 31
2-<3 37 2 39 27 34 8 6 4 5 2 4 0 1 1 0 0 2 1 173
3-<4 29 0 5 38 26 35 18 10 13 3 7 0 4 0 0 2 0 0 190
4-<5 47 0 1 3 31 25 39 18 19 0 11 1 3 0 1 1 0 0 200
5-<6 124 0 0 8 7 204 65 119 91 22 118 7 16 5 3 38 16 1 844
6-<7 34 0 0 1 3 4 83 35 60 31 32 6 11 1 0 6 7 0 314
7-<8 56 0 1 1 3 7 5 94 49 76 52 6 13 1 9 14 9 0 396
8-<9 64 0 0 0 2 2 4 5 116 42 110 22 42 9 4 23 19 0 464
9-<10 24 0 0 0 0 0 1 0 1 45 33 24 21 4 2 16 7 0 178
10-<11 147 0 1 0 1 12 2 6 14 3 306 32 119 32 25 265 283 1 1249
11-<12 4 0 0 0 0 0 1 0 0 1 0 8 4 6 2 4 7 0 37
12-<13 8 0 0 0 0 0 0 0 0 1 1 1 19 9 7 22 25 0 93
13-<14 7 0 0 0 0 0 0 0 1 0 0 0 0 11 1 3 6 0 29
14-<15 3 0 0 0 0 0 0 0 0 0 2 0 2 1 5 4 8 0 25
15-<16 27 0 0 0 0 2 0 0 2 0 5 0 2 0 2 83 208 0 331
>=16 171 0 0 0 0 2 0 2 0 0 23 0 1 0 1 21 1188 3 1412
Total 790 11 58 84 110 304 224 293 372 226 705 107 258 80 62 503 1786 6 5979
Note: Figures are based on sample observations

1 The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank. Results of the previous survey round were released on the Bank’s website on April 07, 2021.

2 The survey is conducted at bi-monthly intervals by the Reserve Bank of India. It provides directional information on near-term inflationary pressures as expected by the respondents and may reflect their own consumption patterns. Hence, they should be treated as households’ sentiments on inflation.

3 Unit-level data for previous rounds of the survey are available on the Database on Indian Economy (DBIE) portal of the Bank (weblink: https://dbie.rbi.org.in/DBIE/dbie.rbi?site=unitLevelData).


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